Financial Advice For Anyone and Everyone
With many people starting summer internship it is important to make sure you are in control of your financial situation. In addition to watching costs, a first summer internship can give one financial independence for the first time. With your first paychecks come your first chances to save, invest, and think about your future.
This past semester, I interned for a personal wealth management company, M3 Wealth Advisors. During this internship, I learned a lot, and I figured that I could distill all I learned into a few things anyone and everyone should consider. These are easy to implement ways of setting yourself up for the best financial position possible.
- Compound interest is one of the most potent forces in the world, let alone finance, make sure you have it working in your favor. Start investing early so you can begin to allow your money to work for you and grow. Even if you have a small amount of money, as it compounds, it will grow exponentially.
- Stick with index funds; have been proven to be the best thing you can invest in. When you finally pull the trigger and begin to invest, look first at index funds and ETFs (factor and standard). These assets have very low fees and allow you to minimize your risk. Just as your interest can compound, so too can fees. Even 1% a year can add up over 40 years! There are a lot of ETFs and Index funds out there, so find one which aligns with your goals and risk tolerance.
- Set Financial Goals! One of the best things you can do for yourself is to sit down and set SMART financial goals. A SMART goal is one which is- Specific, Measurable, Attainable, Relevant and Timely. Think about if you are saving for retirement or saving for that new toy, maybe a Tesla Model 3 ;). I recommend setting goals because with goals can you make sure your risk and return are both realistic. Don’t put all your money in Bitcoin for your retirement, but maybe think about throwing $500 in there and waiting 10 years, spend the profits on a vacation.
- “Get fearful when others are greedy and greedy only when others are fearful”- This Buffett quote illustrates two things: listen to Warren Buffett and don’t follow trends. All of us have heard the saying, “Buy low, Sell high”. Although this advice is so cliche it could be on a fortune cookie, many people don’t follow it. It is easy to follow the trends and buy at all-time highs while selling at all time lows. People get spooked and let emotions get in the way.
- Save more than you think you can/want to. In America, we are culturally predisposed not to save. Instead of just putting away whatever you can each month, live your life like you have an extra 20% tax on your income. If the Government were to impose a 20% tax, you would struggle and argue, but you would pay it. Live life like this and your retired self will thank a younger you. Saving is far cooler than spending.
Although I worked for a financial advisor, I am not one myself. Take what I said with a grain of salt, and maybe even a splash of pepper too. I hope these for bullets help and at least start you thinking about your financial positioning.